Hong Kong think tank Civic Exchange described container handling as "a sunset industry for Hong Kong", given the keen competition from mainland ports, but a logistics academic insists that Hong Kong needs to build Container Terminal 10 to better compete with the neighbouring ports.
Lee Chung-yee, director of the Hong Kong University of Science and Technology (HKUST) department of industrial engineering and logistics management, admits that sea freight development is more promising than air freight but believes there is still a need for Container Terminal 10.
"If we are to compete with the mainland ports, capacity is important," he said, "It is not a question of whether to build Terminal 10 or not, but where to build it." He claimed the industry has been calling for a new container terminal and the government should build one to cater to their needs.
"It is very important to build the infrastructure, otherwise we would be isolated," Lee said. "Hong Kong has been focusing on the development of the financial industry, but the port business, which can move other businesses forward, is never under the spotlight," he said.
Lee said even though Hong Kong's air freight industry is more profitable, it is unrealistic to solely develop that industry. "If we put all our eggs in one basket, it's too risky,' he said, "What if the Chinese government opens its skies? Hong Kong would lose business.
"Hong Kong's sea freight development will not decline, except when the government gives up on the sea freight industry," he added.
Early this month, Christine Loh, head of the independent think tank Civic Exchange, said Shenzhen has the comparative advantages of having more land to expand and lower costs. She said Container Terminal 10 should not be built and instead container terminals at Kwai Chung should be developed for higher-value residential, commercial and recreational uses.
In the past few years, container traffic growth in Hong Kong has been dwindling as more and more shippers opt for Shenzhen where handling of containers is much cheaper. The average cost to truck a FEU to a port terminal in Hong Kong is US$320 but in Shenzhen it is just $120.
Total container throughput of Hong Kong ports in the first nine months of this year grew by only two percent to 17.7 million TEUs compared with the same period last year. On the other hand, cargo throughput at Shenzhen ports in the first nine months reached 15.3 million TEUs, up 13.1 percent compared with the same period last year.
In May, the HKUST interviewed 226 people from 184 logistics firms and 42 percent of the respondents were neutral about the future development of Hong Kong's logistics industry, 28 percent were optimistic while 23 percent were pessimistic.
"Most of them think that the industry is good in certain areas, but in other areas, it is not good enough," Lee said. He said Hong Kong's edge over the mainland lies in the efficient and reliable terminal services with simpler Customs procedures as well as easier consolidation of goods.
However, these merits are overshadowed by the higher cargo handling costs in Hong Kong compared with neighbouring mainland ports. Lee admitted that for sea freight, timing is not an important factor and most people in the industry feel that the more reliable services provided by Hong Kong are not worth the much higher costs. "But for air freight, it is worthwhile for them to pay higher costs because timing and quality are both important," he said.
Lee said Hong Kong should focus on providing value-added services in the supply chain to better compete with China. He said Hong Kong needs to emphasise the development of the high-tech industry.
Hong Kong's shipping industry is also facing increasing competition from the mainland in terms of talent. Lee said although Hong Kong students have more globalised views, their level of English is declining while on the mainland students are improving rapidly.
"The gap between Hong Kong and mainland students is narrowing," he warned.
|
